Smart Metering Systems PLC – update 01

About the company

Smart Metering Systems plc was established in 1995. The Group connects, owns and operates gas and electricity meters on behalf of major energy companies. The Company’s full end to end energy management services and consultancy business support large blue chip companies in the UK, through a network of offices in Bolton, Cambridge, Cardiff, Doncaster, Livingston, Normanton and Rugby. The Company’s services also include infrastructure design, installation, consultancy and project management services for new gas, electricity, water and telecoms connections for licenced energy and telecoms suppliers, end consumers and the UK’s licenced electricity Distribution Network Owners (DNO’s).

New developement, win 1 million points:

Readers will need to refer to the previous post. The link can be found here:

Smart Metering Systems PLC


Smart Metering Systems plc (AIM: SMS.L) (“SMS“), the integrated metering services company that connects, owns, operates and maintains current generation and new advanced metering assets and databases, is pleased to announce that it has signed an exclusive agreement to 31st December 2021 with First Utility Limited (“First Utility“) as its fully integrated domestic smart meter installer and Meter Asset Provider.
 
First Utility, recently acquired by The Shell Petroleum Company Limited, is one of the largest challenger energy suppliers in the UK serving electricity, gas and dual fuel customers.
 
Under the terms of the exclusive agreement, SMS will have initial access to up to 1 million meter points to exchange, fund and install domestic smart meters on behalf of First Utility as part of the UK Government programme, overseen by the Department of Business, Energy and Industrial Strategy (BEIS), requiring domestic energy supply companies to provide all of their customers with a smart meter in homes and small businesses across the UK by 2020.

RNS filing: 18 Oct 2018

Back of the envelope calculations

According to the previous data from the Jun 2018 company report, the total gas and electricity metering and data assets were 2,532,000.

Not including other contract wins. This contract alone increases the above value to 3,532,000 by the end of 2021. This represents an increase in assets of approximately 40%.

Assuming margins remain similar this transpires into an increase of revenue of 40%.

Taking crude data from the filing one has:

•           Revenue increased by 27% to £46.7m (H1 2017: £36.8m)

•           EBITDA increased by 29% to £23.4m (H1 2017: £18.1m)

•           PBT increased by 9% to £10.1m (H1 2017: £9.3m)

Updating by the contract, it is therefore expected that Revenue may increase to £130 million for the full year. By the same ratio, EBITDA to £65 million and PBT to £28 million.

Assuming corporate tax of 20% this leaves net profit at 22 million.This is an under estimate as there have been other contract wins (22 Aug 2018,  13 Feb 2018 ) and one expects more to come.

Summary

Based on the above investors should expect net profit may effectively double (or more).

The current market cap at the time of writing is 623 mill.

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